MBA FPX 5008 Assessment 3 Applying Analytic Techniques to Business

Student Name

Capella University

MBA-FPX5008 Applied Business Analytics

Prof. Name:

Date

Starbucks Corporation: A Deep Dive into the Coffee Giant’s Market Dominance and Growth Strategies

Starbucks Corporation stands as the unrivaled leader in the global specialty coffee industry. With nearly 30,000 locations worldwide, the company has seen impressive financial success, reporting record net revenues of $24.7 billion in 2018. In the United States, specialty coffee consumption has surged, with gourmet coffee holding a 60/40 advantage over traditional coffee types. The U.S. coffee market, valued at $48 billion, sees specialty coffee contributing 55% of the market share. Projections suggest the industry could grow 5.5% annually, potentially reaching $75 billion in revenue over the next five years.

Strategic Acquisitions Fuel Starbucks’ Expansion

While Starbucks’ core focus has always been coffee, the company has diversified through strategic acquisitions such as Teavana, Bay Breads, and Evolution Fresh Juices. These brands have enabled Starbucks to expand its product offerings and maintain a competitive edge. Unlike traditional franchise models, Starbucks operates through company-owned stores and joint ventures in international markets. In 2017, 79% of Starbucks’ revenue came from its company-operated stores, while licensed stores, which make up the majority of locations, contributed only 11% of the total revenue.

Global Expansion: Starbucks’ Growth in Developed and Emerging Markets

Starbucks has successfully expanded its operations across 78 countries, with the U.S. and China being the largest markets. In 2018, the U.S. market saw a 7% growth, while China experienced a 6% increase. The company’s international expansion strategy includes opening 500 new stores in China by the end of 2019, reinforcing its commitment to capturing market share in high-growth regions.

Analyzing Starbucks’ Stock Performance: A Data-Driven Approach

Graphical Data Analysis of Starbucks’ Stock Volumes and Prices

Figure 1 showcases the trading volume of Starbucks stock from September 17, 2018, to September 13, 2019. The histogram indicates that most of the trading volume falls between 7.1 million and 14.3 million shares, with occasional spikes suggesting higher market activity. The data’s right-skewed nature implies that high-volume trades, although infrequent, significantly influence the average volume, indicating volatility.

Figure 2 depicts the adjusted daily closing prices of Starbucks stock for the same period. The graph shows a slightly skewed distribution to the right, with the mean price at $73.72, slightly higher than the median price of $70.88. This trend suggests that a few higher closing prices are driving the average upward, reflecting positive investor sentiment and rising market confidence in Starbucks.

Scatterplots Highlighting the Highs and Lows of Starbucks’ Stock Prices

Figures 3 and 4 illustrate the highest and lowest stock prices of Starbucks, respectively, over the analyzed period. The scatterplots reveal a steady upward trend in both high and low prices, with significant growth observed throughout the year. However, a slight decline at the end of the period could be attributed to external factors such as market sentiment and broader economic influences.

Statistical Insights: Mean, Median, and Standard Deviation of Starbucks Stock Data

The average adjusted closing price for Starbucks from September 2018 to September 2019 was $73.72, reflecting consistent growth. The median price of $70.88, slightly lower than the mean, indicates the presence of higher outliers, suggesting occasional spikes in market activity. The standard deviation of 12.5 suggests a relatively stable stock price with some degree of risk, highlighting the potential for moderate volatility.

Starbucks’ average daily trading volume during this period was approximately 10 million shares, with a median of 9.2 million shares. The standard deviation of 4.9 million reflects significant fluctuations in trading volume, indicating varying levels of market interest and potential volatility in investor sentiment.

Challenges and Opportunities for Starbucks’ Continued Growth

Starbucks’ ongoing success is bolstered by its disciplined approach to global expansion, targeting both established and emerging markets. However, challenges such as the U.S.-China trade tensions pose risks, particularly in China, where Starbucks has over 3,400 outlets. Negative sentiment towards U.S. brands could impact sales and growth in the region.

Additionally, climate change and supply chain disruptions present challenges in sourcing high-quality coffee beans, which could further affect Starbucks’ market stability. The rising volatility in coffee prices due to changing weather patterns and limited access to risk management tools for farmers highlights the need for strategic sourcing and sustainability initiatives.

Conclusion: Strategic Focus on Data-Driven Decisions

Starbucks’ ability to analyze market trends and leverage data is crucial for guiding its strategic decisions. The company’s continued investment in real estate development, product innovation, and marketing optimization underscores its commitment to sustained growth. Despite external challenges, Starbucks’ strong financial performance and strategic expansions suggest that it is well-positioned to maintain its market leadership and drive future success.

Investors can take confidence in Starbucks’ robust market position and data-driven approach, which has consistently delivered growth and profitability. As the company navigates through global challenges and continues to innovate, Starbucks remains a formidable player in the specialty coffee market.

Resources

Brown, N (Mar 11, 2019) Daily Coffee News 2019 Coffee and Beverage Trends: Inside the NCA’s Annual Report Retrieved from https://dailycoffeenews.com/2019/03/11/2019-coffee-and-beverage-trends-inside-the-n cas-annual-report/

Cuofano, G (2019) Four Week MBA Starbucks Business Model in a Nutshell Retrieved from https://fourweekmba.com/starbucks-business-model/

Eckstein, J (Sep 24, 2019) Investopedia How Starbucks Makes Money Retrieved from https://www.investopedia.com/articles/markets/021316/how-starbucks-makes-moneysbux.asp Ganti, A (Apr 30, 2019)

Investopedia Adjusted Closing Price Retrieved from https://www.investopedia.com/terms/a/adjusted_closing_price.asp

Julio, S (Nov 15, 2017) Digital Initiative Starbucks global supply chain and climate change Retrieved from https://digital.hbs.edu/platform-rctom/submission/starbucks-global-s upply-chain-and-climate-change/

Menke, A (April 19, 2018) Global Edge the Global Coffee Industry Retrieved from https://globaledge.msu.edu/blog/post/55607/the-global-coffee-industry